This article comes from First Tuesday Journal Online
In a controversial effort to boost home sales volume nationwide, several U.S. senators have introduced a bill that presents foreign investors with an enticing deal.
The bill proposes to grant visas to foreign investors who pay $500,000 or more in cash for residential real estate on U.S. soil. Foreign investors taking advantage of the new law would then be required to reside in the U.S. for at least 180 days.
This idea to sweeten the pot for foreign investors stems from the already boiling interest in U.S. residential real estate from those abroad. Foreign investors spent $82 billion on residential real estate in the U.S. last year — a 24% increase from the year prior.
Although personal wealth is scant in the U.S. at the moment, it does exist in great quantities in foreign lands (read: China) and thankfully our representatives on the Hill are attempting to match it up with California’s huge backlog of high-tier residential inventory. [For more information on other government plans to subsidize foreign investments in California real estate, see the July 2011 first tuesday article, Welcome to the Hotel California.]
first tuesday take: Foreign investors are interested in California real estate as a safe haven to park their wealth.
Thus, subsidizing foreign investments in domestic residential real estate is a solid idea, in that it simply means adding fuel to an already smoldering fire — much easier than gathering kindling and starting one anew.
The demand exists and it is being further fueled by favorable exchange rates (for most currencies), low interest rates and policy measures such as this U.S. Senate bill. Who then will facilitate these transactions between foreign investors and California property owners? Innovative and well-informed members of the California brokerage community, we hope.
Facilitating such transactions will take pointed skill and a thorough education in the needs and desires of an entirely different breed of homebuyer. Teaming up with a stock broker who represents foreigners will help provide the leads. [To get educated on foreign investments in California real estate, see the upcoming first tuesday article, Wealth from other nations: foreign investments and California real estate.]